The document provides a history of the insurance industry in Cambodia from its establishment in 1956 through periods of government control, destruction under the Khmer Rouge, and recent liberalization and growth. It discusses the development of insurance regulation and supervision in Cambodia, including the roles and responsibilities of the Insurance Commissioner and Insurance Division to foster a sound insurance industry through regulation, supervision, and development of the legal framework.

1. MINISTRY OF ECONOMY AND FINANCE
Financial Industry Department
Insurance Division
Insurance Supervision in
Cambodia
September 29th – 30th, 2010
In Meatra
Head of Insurance Division
meatra_in@mef.gov.kh
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OUTLINES
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2. 3
1. History of Insurance Establishment in Cambodia
It can be noted that according to the history of Cambodia the development
of the Insurance Sector had evolved through three main stages:
From 1956 to 1975
Insurance business in Cambodia first started in 1956 with the existence
of some insurers to serve the needs of market at that time.
Since 31 December 1963, the Government bought back all private
shares from the Insurance Companies.
On 09 January 1964 the National Assembly adopted the Law on
Monopoly which enabled the state to assume control of insurance
business in the country.
In the period of Khmer Rouge Regime, all infrastructures were
destroyed and merchandising activities were fully removed including
insurance activities.
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3. 1. History of Insurance Establishment in Cambodia (Con’t)
1-History of Insurance Establishment in Cambodia
From 1990 to 1999
In line with the economic and financial reform policy of the
Government, a Sub-decree 24 RNK dated 20 September 1990 was
issued that related to the organization and functioning of Ministry of
Finance. It also mentioned about the establishment of Cambodian
National Insurance Company with the rank of department.
On 30 January 1992, the National Assembly adopted Law on
Insurance Business Establishment consisting of 4 Articles and the
insurance sector was placed under supervision and regulation by
state.
The purpose of this law was to contribute in social and economic
development and to compensate the victims against losses caused
by natural catastrophes, accidents and other mishaps.
After the Law on Insurance Business Establishment was
promulgated, there were several important events .
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1. History of Insurance Establishment in Cambodia (Con’t)
1-History of Insurance Establishment in Cambodia
From 2000 to Present
Since 2000, Cambodia made a transition to a Free Market Economy
that allowed the growth of insurance market in Cambodia, the
Government has updated the law and regulations which was
promulgated during 1990-1999.
Law on Insurance consisting of 56 Articles was adopted by National
Assembly on 20 June 2000. Thereafter, Sub-decree on Insurance was
adopted on 22 October 2001.
After the Law and Sub-decree on Insurance was promulgated,
Ministry of Economy and Finance issued several Prakas and Circulars
During this period, there were many important developments.
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4. 2-Insurance Sector under FSDS 2006-2015
The development of insurance sector is embodied in the
Financial Sector Development Strategy 2006-2015. The
Financial Sector Development Strategies (FSDS) 2006-2015
identifies steps that should be taken to move the industry forward
as following:
1) Immediate Priorities (2006-2009)
2) Intermediate and medium term priorities (2009-2012)
3) Longer-term goals (2012-2015)
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3-The Insurance Commissioner
A- Establishment of the Financial Industry Department
Financial Industry Department (FID) has been established under the Sub-
decree on organizing and functioning of Ministry of Economy and Finance on
January 20, 2000. DFI conducted its own organization structure with 5 divisions
including insurance division.
DFI is responsible to control and supervision over the insurance industry in
accordance with Cambodia law on insurance. Insurance Division shall assist
the department to establish better regulation and supervision and strengthen
the public confidence in the insurance industry.
B- Vision and Mission of Insurance Division
The vision of Insurance division is to foster the development of a sound
insurance industry that will make significant contributions to the well being of
the people of Cambodia and play a key role in the socio-economic
development of the country.
The mission of the Insurance Division of the Department of Financial Industry
(DFI) is to promote the orderly development of the local insurance industry
and at the same time to instill public confidence in Cambodia's insurance
market. 8

5. 3-The Insurance Commissioner (Con’t)
2-The Insurance Commissioner
C- Roles and Responsibilities of Insurance Commissioner
Insurance Division comprises four units, namely supervision, regulation, market
development and Administrative and IT unit.
Insurance Division has its roles and responsibilities as following:
To implement and achieve missions and objectives as defined in FSDS 2006-
2015.
To monitor the financial position of insurers including off-site examination and
on-site inspection.
To provide a clear mandate and policy for the licensing and registration of
insurers, agents, brokers, and loss adjusters.
To provide legal review and updating of law and regulations relating to
insurance in line with the growth of insurance market.
To foster the development of a sound insurance industry that will make
significant contributions to the well being of the people of Cambodia and play
a key role in the socio-economic development of the country.
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3-The Insurance Commissioner (Con’t)
To protect the interests of the public through prudent regulation and
supervision of the insurance companies with emphasis on a sound legal
framework.
To ensure sustainable develop the insurance industry via conducting regular
dialogues with GIAC on matters of national importance, building of public
awareness, reviewing public complaints against insurers, cross border
insurance within the ASEAN framework and development of Information
Technology.
To improve the knowledge and capability of insurance officers in various areas
to learn and understand the new development of regulation and supervision
framework in regions and worldwide.
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6. 3-The Insurance Commissioner (Con’t)
d- Supervision of Insurers
Every year insurance division conducts financial examination to all insurance
companies based on the manual off-site desk review. Off-site review has been done
after the submitting of annual audited report. Beside the off-site desk review,
Insurance Division conducted monthly examination on operation of all insurers and
intermediaries.
Insurance Division is also responsible to conducts on-site inspections to insurers
annually completing off-site desk review. On-site inspection is a part of the
enhancement of financial examination.
Through these inspection visits, Insurance Division will get a better understanding
of the latest developments, operation and the financial position of insurers. Such
inspections concentrate on areas like management, internal control, asset and
liabilities management, underwriting, investment, and legal compliance.
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3-The Insurance Commissioner (Con’t)
e- Insurance Legislation Development
In view of the rapid changes taking place in the financial markets both at home and abroad,
Insurance Division has undertaken a comprehensive review of the existing legal framework for
insurance regulation and supervision. Moreover it is also perceived that the Law on Insurance
introduced in 2000 may have become obsolete. In this regard, the Asian Development Bank
has sanctioned a Technical Assistance program to assist the MEF with the said view. The
review of the Law and regulations for insurance is progressing well under the guidance of an
international insurance expert and it is hoped that it will be ready for adoption by 2011.
Beside that , in view of market demand for Micro-insurance, Insurance Division has drafted,
with assistance from Nomura Research Institute (NRI) and IFC/MPDF, a Sub-decree on Micro
Insurance to regulate the market efficiently and effectively. Moreover, the micro insurance
business is committed by the government under the Financial Sector Development Strategy
2006-2015. Currently, Insurance Division has prepared and finalized a draft Sub-decree on
Microinsurance and it will be put in the operation sometimes in 2010 in order to respond the
needs of businessmen who wish to operate micro-insurance business as well as to provide the
opportunities for low income people to receive the benefits such as health care etc.
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7. 3-The Insurance Commissioner (Con’t)
f- Licensing Process
Up on the law on insurance, an applicant shall register at Ministry of Commerce
before applying insurance license from Ministry of Economy and Finance.
Application for and issuance of a license to engage in the insurance business shall
be in accordance with the rules and detail procedures as prescribed in ministerial
regulations. Such approval may be granted with conditions as the Deputy Prime
Minster may prescribe.
Insurance companies can carry out each of following insurance classes:
-LifeInsurance Company which is required to have registered capital at least
equivalent to SDR 5,000,000 (USD 7,000,000).
-The General Insurance Company which is required to have registered capital at
least equivalent to SDR 5,000,000 (USD 7,000,000).
-Life insurance and General Insurance company which is required to have
registered capital at least equivalent to SDR 10,000,000 (USD 14,000,000).
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3-The Insurance Commissioner (Con’t)
g- Overseas Training Programs
In 2009, several officers were sent to attend the training programs conducted by
various international institutions such as GTZ, GRET, Inwent, JICA, General Insurance
Association of Japan (GIAJ), ASEAN Insurance Training and Research Institute
(AITRI), Singapore College of Insurance, and Bank Negara Malaysia etc. These were
complemented by conferences, seminars, and workshops on a variety of subjects as
following:
- International Networking on OECD financial supervision for catastrophe;
- International Approaches to health financing and health insurance (South
East Asia);
- Advanced Course on Non-life insurance and Risk Management;
-Non-life insurance system development for Indochina countries;
-On-site and off-site examination for insurance supervisors;
-Capital adequacy measurement;
-Risk management and market conduct;
-Risk based capital methodology.
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8. 4. Insurance Industry Performance for 2009
In 2009, the insurance industry comprises of six direct writing
companies and one reinsurance company. Most of the insurance
companies are joint venture companies with varying amounts of
foreign equity participation. The intermediary sector is not developed
as there are only two agents and no brokers licensed.
Gross Premiums of general insurance business decreased by 3.18 % to
USD 20.01 million which represented 0.19% of Cambodia Gross
Domestic Product (GDP). For 6 month of 2010, the gross premium of
the whole market increased by 35% to USD 11.43 million over the
previous year (2008: USD 8.5 million).
The reduction in gross premium was a result of global financial crisis
which caused several big constructions’ activities (Engineering) to be
either delayed or cancelled. It can be noted that Engineering business
dropped by 68.24% compared to previous year.
The net premium retained in Cambodia was only US$7.65 million. The
retention ratio was also low at 38.23% reflecting a high level of
reinsurance cessions abroad. All the direct insurers are required to
cede 20% of their premium to Cambodia Re which registered a gross
premium of US$2.5 million in 2009.
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4. Insurance Industry Performance for 2009
The insurance business was profitable in 2009 with the industry
registering an underwriting profit of US$5.8 However, underwriting
profit in 2009 decreased by 6.73% comparing to previous year.
Net Loss incurred ratio increased from 35.12% in 2008 to 39.52% in
2009. The increase in loss is the result of a big fire to a garment
factory. This year, Cambodia also experienced some storm damage
caused by Ketsana which caused flood and damaged many hotels in
Siem Reap.
Total assets of the insurance market stood at $US75.5 million
including Cambodia Re, or just 0.73% of GDP. The insurance
companies are highly liquid as cash deposit is the main category of
asset followed by investment in property and trade receivables in the
form of outstanding premiums and claims recoveries from
reinsurance companies.
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9. 4. Insurance Industry Performance for 2009
Number of Companies
>General Ins. Company = 06
> Reinsurance = 01
> Broker = 01
> Agent = 01
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4. Insurance Industry Performance for 2009
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10. 4. Insurance Industry Performance for 2009
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5. Important Insurance Events For 2009
On 25 August 2009, all licensed insurance companies signed
the MOU for the Establishment of an Insurance Underwriting
Pool in order to underwrite compulsory motor insurance policy
for all cross border travel by road.
On the 24th of September 2009, Financial Industry Department
was delegated to sign the MOU concerning the cooperation on
Compulsory Motor Vehicle Insurance for Vehicles in Cross
Border. This MOU was made between and among four
neighboring countries which are Ministry of Economy and
Finance, Kingdom of Cambodia, Ministry of Finance, Lao
People’s Democratic Republic, Office of Insurance Commission
(OIC), Kingdom of Thailand, Ministry of Finance, Socialist
Republic of Vietnam.
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11. 5. Important Insurance Events For 2009
On 8th October 2009, Financial Industry Department was
delegated to participate the 12th ASEAN Insurance Regulators
Meeting (AIRM), held at Vientiane, Lao PDR. The meeting is
arranged once a year by each ASEAN member countries. Many
topics have been discussed in this meeting.
On 24 October 2009, the International Association of Insurance
Supervisors (IAIS) conducted its Annual General Meeting in Rio
de Janeiro, Brazil. In the meeting, IAIS officially declared that
Ministry of Economy and Finance of Cambodia has become its
member after completing all requirements. Therefore,
Cambodia now is an authorized member and this achievement
is in accordance to the Financial Sector Development Strategy
2006-2015.
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6- Challenges
There are some issues and challenges as follows:
Human resource
Management Information System and IT support (Early
Warning Software System);
Agency and Broker service;
Public awareness;
Information sharing
Premium tariff;
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12. 7- Way Forward
Develop Life insurance and Microinsurance
Recruit more staffs
Enforcement of existing law and regulations
Public insurance awareness
Information sharing
Premium tariff
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